A Partial Adjustment Model of U.S. Electricity Demand by Region, Season, and Sector

27 Pages Posted: 2 Apr 2009

See all articles by Anthony C. Paul

Anthony C. Paul

Resources for the Future

Erica C. Myers

Resources for the Future

Karen L. Palmer

Resources for the Future

Date Written: April 1, 2009

Abstract

Identifying the factors that influence electricity demand in the continental United States and mathematically characterizing them are important for developing electricity consumption projections. The price elasticity of demand is especially important, since the electricity price effects of policy implementation can be substantial and the demand response to policy-induced changes in prices can significantly affect the cost of policy compliance. This paper estimates electricity demand functions with particular attention paid to the demand stickiness that is imposed by the capital-intensive nature of electricity consumption and to regional, seasonal, and sectoral variation. The analysis uses a partial adjustment model of electricity demand that is estimated in a fixed-effects OLS framework. This model formulation allows for the price elasticity to be expressed in both its short-run and long-run forms. Price elasticities are found to be broadly consistent with the existing literature, but with important regional, seasonal, and sectoral differences.

Keywords: electricity, demand elasticities, energy demand, partial adjustment

JEL Classification: L94

Suggested Citation

Paul, Anthony C. and Myers, Erica C. and Palmer, Karen, A Partial Adjustment Model of U.S. Electricity Demand by Region, Season, and Sector (April 1, 2009). RFF Discussion Paper No. 08-50. Available at SSRN: https://ssrn.com/abstract=1372228 or http://dx.doi.org/10.2139/ssrn.1372228

Anthony C. Paul (Contact Author)

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States

Erica C. Myers

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States

Karen Palmer

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
430
Abstract Views
2,044
rank
67,335
PlumX Metrics